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IPO This Week: Snowflake, Airbnb, Palantir (PLTR) + News on ITACU, KCAC + QuantumScape: Wk of 9/7/20 - YouTube
Channel: Healthy, Wealthy, and Wise
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The calm before the storm continues! Weāll
look at this weekās IPO and SPAC activity
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including news on who starts trading this
week, what big merger was announced, and upcoming
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lockup and quiet period expiration dates.
And since that activity is limited during
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this shortened holiday week, we'll take a
peek into some of most highly anticipated
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IPOs coming this fall. Welcome to IPO This
Week for the week of September 7th, 2020.
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Welcome to IPO This Week where each and every
week, we talk about all the companies going
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public, the latest SPACs hitting the market,
and all the lockup and notable quiet period
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expirations. My name is Kevin and I want to
thank you for checking in again for this weekās
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episode. For those of you in the US, I hope
you all had a great Labor Day weekend and
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enjoyed a little break from the markets after
some craziness at the end of last week. As
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we are rolling into a busy IPO season, besides
for our normal coverage, I thought today we
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could talk a little bit about three of the
most intriguing companies out there in the
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pipeline and let you know where things stand
as of this recording. Oh, and you know the
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names: AirBnb, Snowflake, and Palantir. Let
me know in the comments which of these three
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companies youāre most interested inā¦you
never know, you might get an extra video on
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the one that has the most votes.
Upfront, just a quick reminder that Iām
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not a financial advisor and while this video
is meant to be informative, it should not
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be seen as a recommendation for you to take
any action on the companies coveredāyou
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should always do your own research or consult
with your own financial advisor when making
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any investment decision.
And with that out of the way, letās get
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to our normal business first and talk about
the new IPOs and SPACs coming out this week.
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Like last week, weāre limited as of right
now, we only have one confirmed SPAC coming
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to market this week and that is Industrial
Tech Acquisitions, ticker ITACU, a blank check
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company out of Houston, Texas who plans to
raise $75 million to acquire an industrial
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or energy focused technology business with
an enterprise value in the range of 250 to
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500 million dollars with pricing set at the
standard $10. According to information posted
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on Nasdaq.com, the company increased its deal
size by 25% last month. This SPACās management
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team is led by venture capitalist Scott Crist,
who serves as CEO of intelligent video monitoring
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firm Osperity and is also a Partner at Texas
Ventures. We'll keep an eye on this one and
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we'll see who they eventually announce as
their target when that time comes.
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If any other companies are added to this weekās
calendar, Iāll definitely post an update
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for you. As many of you know, much of the
information with IPOs is fluid so I try to
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post any updates from the video in the comments
as I have them.
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We do have a significant merger to talk about;
near the end of last week, Kensington Capital
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Acquisition, ticker: KCAC, announced an agreement
with next generation battery developer QuantumScape
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for a merger, which will result in QuantumScape
raising 700 million dollars and becoming a
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publicly listed company. QuantumScape has
been exclusively focused on developing solid-state
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batteries and designing a scalable manufacturing
process to commercialize its battery technology
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for the automotive industry. QuantumScape
believes the proceeds from this transaction
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will fully fund the company through the start
of production of its joint venture with Volkswagen.
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Current QuantumScape board member JB Straubel
who was a former Tesla Chief Technology Officer
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stated that, "QuantumScape's solid-state anode-less
design represents the most elegant architecture
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I've seen for a lithium-based battery system,
and the company has an opportunity to redefine
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the battery landscape." Wall Street reacted
positively to the announcement with the SPACās
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stock jumping from $10 to $22.50 at the end
of last week.
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As far as upcoming lock-up expirations, we
have only have biotech Imara, symbol IMRA,
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a biopharmaceutical company that develops
and commercializes therapeutics for patients
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with rare genetic disorders of hemoglobin,
such as sickle cell diseases; their lockup
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ends on Tuesday, Sept. 8th. And then we also
have a few notable quiet periods ending on
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Tuesday as well, and those include KE Holdings
(BEKE), NetSTREIT, (NTST), Duck Creek Technologies,
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(DCT), and CureVac (CVAC), all companies weāve
discussed here in the past; if youāre interested,
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you can catch up with each one of them in
the playlist Iāll link for you.
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So letās now start looking forward to what
we know and what weāre expecting in the
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near future for some of the biggest names
in the IPO pipeline set to debut before the
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end of the year.
The first one is one that I covered in two
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videos last week, and thatās Palantir which
will be direct listed under the ticker PLTR.
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Iām not going to repeat everything from
those 2 videos, but I have created a playlist
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for Palantir which Iāll link for you if
you havenāt seen them plus Iāll be making
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more videos on the company as it readies to
go public and then add them to the playlist
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as well. One of the things I do want to remind
you is that on Wednesday of this week, the
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big data analytics company will have an investor
day livestream that potential investors are
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welcome to attend. The details on how to attend
it is in the shorter of the two videos that
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I made. The other thing that I want to let
you know with Palantir today is that they
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have amended or updated their S-1 filing,
which of course they did right after my last
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videoā¦this is becoming a pretty frequent
occurrence with them. So Iām sure after
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I finished this video, theyāll put something
else out just drive me crazy. Anyway, within
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the amended filing, there was clarification
on how the company would be governed which
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was something we were discussing in the comments
over the weekend.
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So the original filing spoke of a unique three-class
voting structure where Palantir founders Alex
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Karp, Stephen Cohen and Peter Thiel will be
given a special āClass Fā share that will
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ensure they hold 49.999999% of the ownership
of the company in perpetuity āmeaning that
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even if they sell the underlying shares, they
will still hold that percentage. Which sounds
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pretty odd, doesnāt it? Well, because of
that, the SEC probably pushed back resulting
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in the amended filing. Thereās a couple
of good articles out there on this if youāre
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interested, Iām going to reference one from
Danny Crichton at TechCrunch, where Iāll
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link in the description. In the amended filing,
a new risk factor was added to address this,
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which states: Although we currently are not
considered to be a ācontrolled companyā
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under the New York Stock Exchange corporate
governance rules, we may in the future become
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a controlled company due to the concentration
of voting power among our Founders and their
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affiliates.
So in case you donāt know, a ācontrolled
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companyā based on New York Stock Exchange
corporate governance rules is a company of
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which more than 50% of the voting power is
held by an individual, group, or another company.
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Now at first glance, the filing states that
the founders will own 49.999999% so technically
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it seems that they are right below the threshold.
However, thatās only when accounting for
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those special Class F shares, as they will
almost certainly have over 50% when you account
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for any other classes of shares they will
own. In other words, public shareholders in
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the company will likely legally have zero
input into the governance of the company.
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The key line in the filing is āIf we were
a controlled company, we would be eligible
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to and could elect not to comply with certain
of the New York Stock Exchange corporate governance
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standards.ā Based on this, the author of
the article states that āGiven the diminished
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voting power of employee and investor shares,
it is possible that these voting provisions
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will negatively impact the final price of
those shares.ā So I wanted you to be aware
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of the updates with Palantir, and again, the
article is a good read it you want to check
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it out. I'll be monitoring and clarifying
information as it comes out, plus I have every
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intention to put out a thorough video on the
company closer, but before, it starts trading
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and Iāll share my personal thoughts on all
of the nuances of the company and their direct
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listingā¦so stay tuned for that.
Next up, letās talk a little bit about AirBnB.
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If thereās one company out there with the
name-brand that the general public is expecting
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to go public very soon and would generate
a lot of interest from retail investors, that
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would be AirBnB. Other than mentioning that
the company is looking to go public, we have
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yet to talk about it here. And while there
is a lot of videos and articles to check out,
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the reason I havenāt talked about it yet
is because, as of right nowā¦and really hoping
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this doesnāt change until the video is released!...the
company has only filed a confidential draft
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registration statement on August 19th so there
is no public filing available to review where
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we can talk about the offering and what financials
the company is reporting. So most of whatās
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out there is based on anticipation, not facts
or statements from any filing. But there was
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an interesting interview on Bloomberg TV that
I thought was interesting to share and it
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was with Pershing Squareās Bill Ackman,
where he had shared that he had preliminary
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discussions to take the company public via
the SPAC route. In the interview, he stressed
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that the talks were very preliminary where
they didnāt get to dive into the company
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financials. According to him, AirBnb hasnāt
ruled out the SPAC route, but he feels the
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company would prefer to go public through
the traditional IPO route versus going with
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a SPAC. So itās interesting, because for
the viewers that follow SPACs, you know that
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Pershing Square was the largest SPAC ever
and they have 5 billion dollars to work with.
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So to me, itās interesting to hear that
AirBnB has looked into SPACs and the certainty
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of the dollars it would bring as it also looks
to go to underwriting banks and see it what
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it could raise there, knowing that their business
took a hit during the pandemic and the concerns
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of more market volatilityā¦so they're definitely
doing their due diligence. Personally, I am
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so looking forward to seeing an S-1 filing
and being able to really examine the financials
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and see how well they have actually weathered
the pandemic storm. While their business was
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grounded to a halt earlier in the year, there
is growing evidence people are booking again,
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albeit more in closer destinations, or ones
that are within driving distance and I would
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love to see the actual data they have on that.
Needless to say, when I have concrete information
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to share with you on the company, Iāll share
it with you so definitely have your notification
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bell turned on.
And the last of the big 3 upcoming IPOs weāll
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talk about today is Snowflake, who will trade
under the ticker SNOW. I made an introduction
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video to the cloud data warehousing company
a couple of weeks ago when their IPO filing
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was announced; if you havenāt seen it yet,
Iāll link it in the description for you.
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If there has been one company more of my viewers
have asked about than any others, itās been
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Snowflake. And there had been a lot of interest
for some time as this company has raised a
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lot of capital, in fact around 1 and a half
billion dollars in venture financing. And
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to further add to its appeal, last December,
the company landed Frank Slootman as CEO.
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For those of you who may not have heard of
him, Slootman was previously Chairman of ServiceNow
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and is well regarded in the industry for making
money on taking private companies public.
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Before ServiceNow, he was successful in taking
Data Domain public in 2007 before selling
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it for big money 2 years later.
While Snowflake is not profitable, it is growing
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fast; for the fiscal years ended January 31
for both 2019 and 2020, their revenue had
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year-over-year growth of 174%. And for an
industry, the data warehouse as a service
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market is predicted to grow at a 29.2% compound
annual rate through 2030ā¦so there should
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be a lot more growth to come. In fact, according
to Bloomberg Intelligence thatās because
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āonly 30% of data analytics is now performed
in the cloud, putting Snowflake in a great
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position to take share from the legacy on-premise
vendors.ā The company has a lot of big name
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customers in a variety of industries; some
of them include Capital One, Experian, Bankrate,
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Sony, Office Depot, DoorDash, Instacart, Adobe,
DocuSign, Micron and Dropbox.
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Now, on the flip side, they do have some big
time and equally big name competition with
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Amazonās AWS, Microsoftās Azure and Google
Cloud. Where Slootman sees those companies
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as operating the infrastructure cloud, he
has been quoted as saying that Snowflake wants
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to be the leader of what he calls the "data
cloud ā a platform that governs and secures
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private data and can manage rapidly growing
workloads". So think about that for a second
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and you start to realize that, from the infrastructure
point of view, Snowflake actually is a customer
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to those big name, deep pocket companies.
And yet, Snowflake also competes with the
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cloud data management services offered by
those very same companies, including going
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head-to-head against their cloud data warehouse
services: AWS Redshift, Google Big Query and
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Microsoft Synapse. So itās an interesting
dynamic where Snowflake is a customer to its
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competitors and because of that, is very dependent
on the pricing terms it can get from them.
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For Snowflake's sake, hopefully Amazon, Microsoft
and Google continue to act more like partners
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than as competitors.
I feel like I could go on and on with Snowflake,
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but Iām going to stop here and also remind
you that I will be putting out a thorough
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analysis video for this company as well as
we get closer to the IPO. This is definitely
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going to be an interesting time on the channel
and Iām so glad to have you along with me.
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Iāve had a lot of good comments and Iām
loving the discussion with you guys. Which
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reminds me, remember to let me know in the
comments which of Palantir, Airbnb and Snowflake
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youāre most interested in.
So with that, please like the video if you
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enjoyed it and share with your friends and
also on any of your social media sites and
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forums youāre onāthe more exposure we
get, the more we can grow the channel together
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which'll allow me to justify putting more
time towards it. And if youāre new to the
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channel or just an occasional visitor, weād
love to have you join the community, itās
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totally free, you just gotta press that red
subscribe button. And with that, Iāll wish
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you a good week of tradingā¦.thank you for
watching and, until next time, have a great
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day!
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